Technology Does Not Equal Strategy The past several years have witnessed an explosion in CRM tools, especially software applications. According to a recent report from Forrester Research (March 2001), 45% of firms are considering or piloting CRM projects while another 37% have installations under way or completed. These firms will spend tens of millions on CRM applications, often working with ten or more separate vendors. Yet, the quality of customer service continues to decline. The American Customer Satisfaction Index, compiled by the University of Michigan s Business School, declined an average of 7.9% between 1994 and 2000. At the same time the number of on-line sites where consumers can post their customer service complaints for the entire world to see has risen dramatically. What s going on here? If CRM is the powerful weapon we say it is, then why isn t service improving? We believe the problem stems from confusing technology with strategy. In both large and small-scale efforts, it s not uncommon to see the term CRM used as shorthand for the technology that supports the strategy implementation. As you can see in Figure 1-1, your CRM strategy should drive your organizational structure, which should in turn drive choices around technology implementation. Yet, individuals and organizations become enamored of the technology applications and forget that that they must start with a CRM strategy. The language confusion doesn t help. Countless articles and reviews of CRM tools and technologies never mention strategy. They imply, or even come right out and say, that the only thing you need to do to have effective CRM is buy the right application. Yes, the right application is critical. But it is your CRM strategy that informs which application will be right for you. A recent conversation with a new client vividly illustrated this point to us. Steve is the general manager for a new resort located in a remote setting. What s your approach for customer relationship management? we asked. Well, we would like to buy a database management system, he said, naming a particular application, but right now our revenues just won t support the investment. We tried again, What s your strategy for making sure that guests who come to stay one time will want to come back? How do you ensure that every staff member works to create a bond with each guest? Well, he began, looking intent, Everyone just does their best to be friendly and to make the guest feel welcome. We ll do more when we get the database in place. Steve had fallen into the CRM is technology confusion. It s easy to do and dangerous. Without a strategy to create, maintain, and expand guest relationships, Steve s resort may never have the revenue to invest in CRM tools-or even to stay in business.